Fingerprint criminal background checks by the FBI, the new global Legal Entity Identifier (LEI) system endorsed by the G–20, registration with the U.S. Commodity Futures Trading Commission (CFTC) as commodity pool operators (CPOs) or commodity trading advisers (CTAs) for certain over-the-counter (OTC) derivative market participants (including those outside the United States), extra-territorial cross-border supervision, rules for exemption from registration, onerous aggregation rules, new filing and reporting requirements (e.g., Form 7R, Form 8R), swap dealers versus major swap market participants, CFTC jurisdiction over swaps versus SEC jurisdiction over security-based swaps, moving from bilateral to central counterparty clearing — these are just some of the many complexities that OTC derivative market participants in Asia Pacific, Europe, and beyond are finding that they must come to grips with in dealing with the new laws and regulations. A CFTC regulation start date of 12 October, 2012, has just passed, and local regulatory consultations in Hong Kong, Singapore, Japan, and Australia as well as various European jurisdictions are in process.
Virtually every regulatory authority, from those in Asia Pacific to those in the Americas, Europe, and beyond, is forging ahead to implement pervasive legal and regulatory revisions relating to the sizable and complex OTC derivative markets. It generally started with the passage of the Dodd–Frank Act (DFA) in 2010, right after the Pittsburgh Summit in 2009 for the G–20 nations, with an aim to curtail the systemic risk and enhance transparency in the functioning of the OTC derivative market. Since its passage in 2010, the DFA has given rise to some 400 different rules in over 9,000 pages resulting from over 85 studies by regulators in various jurisdictions. Yet, most regulatory authorities have completed only a fraction of the preparatory work for implementation; the CFTC, for example, is said to have completed merely about one-third of what is necessary to date.
Market participants in Asia Pacific, Europe, and other non-U.S. jurisdictions must also be ready to swiftly adjust their business operations and infrastructure to accommodate the dawn of the “new ecosystem” and navigate through this regulatory tsunami, which could significantly affect hedge funds, broker–dealers, banks, financial institutions, corporate treasuries, insurance companies, pension funds, and other entities that participate in the OTC derivative market.
This webinar is aimed at providing an update on the latest legal and regulatory developments relating to OTC derivatives for market professionals, as well as a review of the impact on the various OTC derivative market participants mentioned above. It starts with an overview of the legal and regulatory changes relating to OTC derivatives brought on by the DFA, including the impact of Title VII on hedge funds and other asset managers as well as OTC derivative market participants in general. CPO and CTA registration and exemption rules, compliance for Asia-Pacific, European, and other non-U.S. market participants, and various local regulatory initiatives across Asia Pacific and Europe will be reviewed. There will be more detailed discussions on the impact of the changes pertaining to the following topics:
- Trading and Clearing
- Collateral and Margin
- Accounting and Reporting
- Compliance and Tax
- Cross-Border and Extra-Territorial Implications
Read more on this topic
Enterprising Investor blog
Dodd-Frank Extra-territoriality: OTC Derivatives Reform in Asia, Europe, and Beyond
Market Integrity Insights blog
Is the CFTC’s Cross-Border Swaps Proposal Over-Reaching, Inviting Regulatory Arbitrage, or Just Right?
Samuel Lum, CFA and Padma Venkat, CFA
This is an archived recording of a live event that took place on 20 November 2012.